Low uptake of tourism stimulus loan facility

GOVERNMENT is concerned about slow uptake of the tourism stimulus loan funds amid revelations that financial institutions are turning down many applications.

The Zimbabwe Tourism Authority (ZTA) has since written to industry players who may have applied for the fund to approach the authority for assistance. This comes as only one operator in the sector has benefitted from the loan facility.

Government last year came up with a $500 million Tourism Support Fund in guarantees for tourism sector players to access working capital in the form of loans from banks.

A total of $20 million was meant to provide seed capital to kick-start a Tourism Revolving Fund while Value Added Tax (VAT) payable by tourists for accommodation and visitor services was waived.

This was part of an $18 billion Economic Recovery and Stimulus Package by Government aimed at reinvigorating the economy following slowdown induced by Covid-19.

However, Business Chronicle understands the high cost of borrowing and banks turning down applications is hindering uptake of the loan facility.

So far, Mbano Manor Hotel in Victoria Falls is the only operator that has managed to access the fund after getting $10 million from CBZ Bank.

“The Zimbabwe Tourism Authority is calling upon all tourism operators who applied for the tourism stimulus package to urgently get hold of the ZTA. This is meant to assist in the expedition of the approval processes,” reads a statement from ZTA.

Operators are encouraged to send comprehensive details to ZTA.

In a recent interview, Environment, Climate, Tourism and Hospitality Industry Minister Nqobizitha Mangaliso Ndlovu said there have been challenges with the loan facility so far.

He said some banks initially thought Government was going to frontload the $500 million yet Treasury is only guaranteeing in the event of default of payment as banks should rather continue with their relationship with individual clients.

Minister Ndlovu said he had approached Finance and Economic Development Minister Professor Mthuli Ncube on how best Government can engage financial institutions.

“As for the loan facility we haven’t had much success mainly from the first stage because the cost of borrowing on its own is a bit too high at more than 20 percent per annum. This is the first obstacle we have that our cost of fund or borrowing is too high and it is an expense to business.

“An operator has a relationship with their bank, they will go and make an application. Where the bank ordinarily would then require collateral and other forms of security then Treasury comes making an undertaking as Government that we will then pay for you mainly in the event that you default.

“A lot of banks are also turning down these applications before getting to the stage where they need Treasury. I have since highlighted this to the Minister of Finance to say let’s engage the banks and find out what their problems are,” said Minister Ndlovu.

He said when borrowing, a business would generally want to use the resources to generate more than the cost of borrowing to make profit.
Minister Ndlovu implored financial institutions and operators to nurture their existing relationships as the stimulus package is only temporary while they will remain in business and needing each other.

He said Government is unhappy about the current status on the facility.

“To my knowledge there has only been one operator who has received and thankfully it is here in Victoria Falls. I got worried at some point through when there were sentiments from a few which seemed a bit unfair side as people asked why her. Instead of asking why her, we should be asking why only her because we expect them to be more and we should be saying what should we do to get more beneficiaries.

“We believe we should do more to assist the industry because she went through a very lengthy process which we are not proud of as we should be able to process a bit quicker,” said Minister Ndlovu.

He said his Ministry has been using various platforms to clarify the loan facility after realisation that people lacked understanding of its implementation.

The US$8 million Mbano Manor Hotel operated by Dr Matifadza Martha Nyazema and situated near Zambezi National Park with 19 suites, 18 of them standard and one presidential, was officially launched by President Mnangagwa last year as one of the high end facilities in the tourism city. — chronicle.cl.zw